RNC Costs for Wooing Donors Disputed

Republican National Committee Chairman Michael S. Steele's staff and some party officials are at odds over the organization's efforts to reel in money from high-dollar donors, offering conflicting interpretations of the RNC's fund-raising effectiveness ahead of critical midterm elections.

A spreadsheet prepared last month by RNC Treasurer Randy Pullen found that in the first quarter of 2010, the party spent $1.09 for every $1.00 it raised from donors who give $1,000 or more — the high-dollar benefactors long considered the financial lifeblood of political parties. Mr. Pullen, a certified public accountant and head of the Arizona Republican Party, said his report calculated revenues and expenses in the way traditionally done by the national party.

But other RNC officials close to Mr. Steele sharply disputed the numbers, saying Mr. Pullen's figures for the cost of the funding-outreach effort were too high.

The spreadsheet number "is wrong [because] it takes the revenues from just our major-donor program, but includes expenses from our entire finance department administrative costs, postage, printing costs, etc.," Mr. Heye wrote in an e-mail response.

Mr. Pullen's analysis concluded that the committee lost $185,434 on the big-donor program, spending $2,067,675 to take in $1,882,241. But Mr. Heye countered that, factoring in the correct expenses for the program, the RNC actually netted $322,589 from the major-donor outreach effort.

The conflicting interpretations come amid continuing questions about the effectiveness of Mr. Steele's RNC and its ability to provide funding for critical races this fall. Top Republicans have expressed concerns about the RNC's internal financial controls and at least some top GOP donors have said they will give to other party organizations instead of the RNC.

RNC Budget Committee Chairman Louis Pope, who received Mr. Pullen's spreadsheet, originally called the numbers "very disappointing" in a commentary distributed to fellow Budget Committee members.

"While senior staff continues to evaluate this program to determine what corrective action should be taken, it is clear that major changes need to be made," Mr. Pope said.

The RNC budget chief noted that part of the problem was that "programs which worked well during the Bush White House years are not effective in today's political reality of the Republican Party being in the minority."

But after the RNC's fund-raising operations came under public scrutiny, Mr. Pope this week sent a new e-mail communique to Budget Committee and other RNC members taking back his earlier criticism of the level of RNC expenses, saying he now thinks the administrative costs of the big-donor program had been incorrectly calculated.

"Unfortunately, when the spreadsheet was prepared, the number for major-donor expenses apparently also included the actual administrative overhead for the department (salaries, office expenses, etc.), which should not have been included in the cost of fundraising numbers," Mr. Pope wrote in the new e-mail.

Mr. Pullen replied that, while he would not object to a change in the formula, his way of calculating has been standard operating procedure on the RNC for years, with no objections from anybody.

In his own note to the budget panel and RNC members, Mr. Pullen wrote, "I want to apologize beforehand about the confusion surrounding the allocation of administrative costs in the finance division on the spreadsheet for March. The allocation I used was provided by finance on a spreadsheet and is how they have been allocating admin/overhead costs for years in that division. If there was a need for a change in how costs are allocated, it was not brought to my attention while I was doing the analysis."

The Democratic National Committee announced this week a $20 million-plus plan to aid congressional candidates this fall, but the expenses of both party headquarters operations have come under scrutiny in recent days.

An analysis by the Center for Responsive Politics — done for The Washington Post — estimated last week that overhead and expenses have so far come to $60 million for the DNC, or 59 cents out over every $1 raised. The number was even higher for Mr. Steele's RNC, which the report said has spent more than $74 million so far on administration and fund-raising costs, or 68 percent of its $109 million in revenues.

In a political climate that seems to be tilting toward Republicans, the RNC has held its own in the race for campaign cash, Mr. Heye contended.

"Despite the advantage the Democratic National Committee holds by controlling the White House and both chambers of Congress, the RNC has outraised the DNC in nine of the past 15 reported months," Mr. Heye said.

"Moreover, when one factors in the DNC's lingering debt, the RNC has more available cash than the DNC. I would define that a success — and our major-donors program is an important part of that."

But the DNC outpaced the RNC in the latest fundraising totals for March, $13 million to $11.4 million.

According to a CQ Politics analysis, the DNC also did a better job at attracting the very top donors: Thirty-three individuals — author Stephen King among them — kicked in $30,400 each for the Democrats in March, the maximum under federal election law. Ten GOP donors gave the same maximum amount to the RNC.